Interest Rates, the Emergency Fund Hypothesis and Saving through Endowment Policies: Some Empirical Evidence for the U.K.

Dar, Arif Billah; Dodds, Colin

doi:10.2307/253166

Cited by 41 publications

(55 citation statements)

References 9 publications

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“…Our findings are in line with Dar and Dodds [18] for example. For Great Britain they also show that the demand for life insurances is not correlated with the internal interest rate or the yield of alternative asset classes.…”

Section: Discussionsupporting

confidence: 92%

Impact of Interest Rate Shocks on the Asset Structure of Private Households in Germany with Particular Reference to Insurance

Linderkamp¹

2016

ACM

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This paper investigates the portfolio structure of private households in Germany from 1994 to 2014. We focus on the question of how sensitively private households react to a shock in the interest rate level. We use a vector autoregressive model and analyze the corresponding impulse-response functions. The data set is provided by Deutsche Bundesbank. Our hypothesis that the asset class Insurance reacts less sensitively to changes in the interest rate level than other asset classes cannot be confirmed. In general, the results show almost no reactions in the portfolio proportions after an interest rate shock. From our results, it appears that private households in Germany clearly do not integrate interest rate information into their portfolio allocation decisions.

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Section: Discussionsupporting

confidence: 92%

Impact of Interest Rate Shocks on the Asset Structure of Private Households in Germany with Particular Reference to Insurance

Linderkamp¹

2016

ACM

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“…Although, according to the theoretical and empirical literature on life insurance lapse (for comprehensive review of the literature, see Eling and Kohanski [2013]), macroeconomic and insurance-specific factors could determine lapse [Dar and Dodds 1989;Outreville 1990;Kuo, Tsai, and Chen 2000;Kim 2005a;2005b;Cox and Lin 2006;Kiesenbauer 2012] this paper is focused on the policyholder and features of the life insurance contract encompassing demographic characteristics and the health status of policyholders, the economic characteristics of policyholders as well as specific features of life insurance policies.…”

Section: Theoretical Considerations On the Effects And Determinants Omentioning

confidence: 99%

Policyholder and Insurance Policy Features as Determinants of Life Insurance Lapse - Evidence from Croatia

Ćurak

Podrug

Poposki

2015

EBR

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“…As alluded to earlier, these studies typically are conducted using aggregate (macroeconomic) data to test the different hypotheses. For instance, Dar and Dodds (1989) use aggregate data on endowment life insurance policies written by British life insurers from 1952 through 1985. Consistent with the EFH, they find that unemployment is directly related to the policy surrender decision Similarly, Outreville (1990) utilizes country-level data (both for the United States and for Canada) for the period 1966 through 1979 to examine policy lapses while Russell (1997) uses U.S. state-specific economic variables to identify important factors related to the decision to surrender a life insurance policy.…”

Section: Lapse Literaturementioning

confidence: 99%

“…Prior tests of the EFH proxy for the effect of financial hardship on lapses by using aggregate unemployment rates (e.g., Dar and Dodds, 1989;Outreville, 1990;Kuo et al, 2003). We directly capture the effect of recent household unemployment by using a binary variable set equal to 1 if the respondent or spouse reports a work status of "unemployed" after reporting a non-unemployed work status in the previous survey (NewUnemploy).…”

Section: Emergency Fund Hypothesis Variablesmentioning

confidence: 99%

Life Insurance Lapse Behavior

Fier

Liebenberg

2013

North American Actuarial Journal

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Life insurance policy lapses are detrimental to issuing insurers when lapses substantially deviate from insurer expectations. The extant literature has proposed and tested, using macroeconomic data, several hypotheses regarding lapse determinants. While macroeconomic data are useful in providing a general test of lapse determinants, the use of aggregate data precludes an analysis of microeconomic factors that may drive the lapse decision. We develop and test a microeconomic model of voluntary life insurance lapse behavior and provide some of the first evidence regarding household factors related to life insurance lapses. Our findings support and extend the prior evidence regarding lapse determinants. Consistent with the emergency fund hypothesis we find that voluntary lapses are related to large income shocks, and consistent with the policy replacement hypothesis we find that the decision to lapse a life insurance policy is directly related to the purchase of a different life insurance policy. We also find that age is an important moderating factor in the lapse decision. Changes in income appear to more directly affect the decision to lapse for younger households, while they are generally unrelated to the lapse decision for older households.

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Interest Rates, the Emergency Fund Hypothesis and Saving through Endowment Policies: Some Empirical Evidence for the U.K.

Cited by 41 publications

References 9 publications

Impact of Interest Rate Shocks on the Asset Structure of Private Households in Germany with Particular Reference to Insurance

Impact of Interest Rate Shocks on the Asset Structure of Private Households in Germany with Particular Reference to Insurance

Policyholder and Insurance Policy Features as Determinants of Life Insurance Lapse - Evidence from Croatia

Life Insurance Lapse Behavior

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